As new bank cards replace gives and your spending habits change over time, the cardboard you’ve relied on for years could not match. If that’s the case, you may apply for a brand new bank card and shut your previous one — however that might imply forfeiting your remaining rewards and coping with dings to your credit score rating.

Enter the “product change”: a approach to improve or downgrade your present card for a higher- or lower-end card throughout the identical household of merchandise, sometimes with out closing the previous card and opening a wholly new one.

Upgrading or downgrading your bank card entails calling your bank card firm and asking what choices can be found to you. Listed here are a number of causes you would possibly wish to make the change:

1. You wish to cease paying an annual price

There’s little motive to maintain paying an annual price if you hardly ever use a card and also you cashed out any earned rewards a very long time in the past. On this case, downgrading to a no-fee model of the cardboard is a money-saving transfer. The brand new card will doubtless have a much less sturdy rewards program, if any, however that hardly issues when the cardboard already spends its days in your sock drawer.

2. You need extra related perks

Over time, your spending and reward-redemption habits change. Product-changing your card can unlock beforehand unavailable options. For instance, upgrading your lodge card to a higher-end model can deliver you as much as a extra elite standing tier with that lodge chain’s loyalty program, which could be helpful for those who start to journey extra typically than earlier than. Downgrading your card, however, means you not pay an annual price for advantages you don’t use.

3. You wish to ditch the cardboard, however not the rewards you have earned

Closing a bank card can imply forfeiting any rewards you continue to have in your account (or cashing them out, probably at a decrease worth per level). A product change generally is a approach to maintain on to your factors — however needless to say level values could change.

Steffa Mantilla, founding father of the private finance weblog Cash Tamer, opened a Chase enterprise card final 12 months. Whereas it charged an annual price, it got here with a beneficiant sign-up bonus and higher-than-average level redemption charges for journey. As soon as she discovered that she was not utilizing the cardboard’s journey advantages, she downgraded to the cardboard’s no-fee counterpart. Mantilla is open to upgrading again to the unique card if her enterprise journey schedule resumes sooner or later.

“As a result of I stored my card with Chase, I did not lose any of my bonus factors,” she stated in an electronic mail.

4. You wish to ditch the cardboard, however not its historical past

Cost historical past and the size of time that you’ve got had credit score are each elements in your credit score scores. Therefore, it may be useful to maintain a bank card account open, energetic and in good standing for years. However, once more, you don’t have to pay an annual price to get the advantages of a well-aged bank card. Downgrading to a no-fee card enables you to keep the identical account historical past — and infrequently even the identical account quantity — for a decrease price.

5. You wish to keep your whole credit score restrict

One other consider your credit score scores is credit score utilization, or how a lot of your obtainable credit score you are utilizing. We suggest charging not more than 30% of your whole credit score restrict every billing cycle. Whenever you shut a bank card however your spending on different playing cards stays the identical, it turns into that a lot simpler to make use of much more of your obtainable credit score. This may negatively have an effect on your credit score scores over time. Preserving a card account open by upgrading or downgrading permits you to keep the identical general credit score restrict.

6. You wish to keep away from a tough pull for a brand new card

Most bank card issuers carry out a tough credit score inquiry, or credit score pull, if you apply for a brand new card. This may briefly decrease your credit score rating by a number of factors. Requesting a product change permits you to change playing cards whereas bypassing the credit score pull.

7. You’re supplied an incentive to modify

At occasions, bank card firms could attempt to entice you to improve with an incentive bonus price a number of thousand factors or miles. Because the change would possibly require the next annual price, this bonus helps sweeten the deal, particularly as a result of product adjustments often render you ineligible to qualify for the cardboard’s sign-up bonus for brand spanking new account holders. If you happen to’re supplied an incentive, it might be price doing the maths to see whether or not the bonus plus the cardboard’s increased ongoing rewards charge will offset a doubtlessly increased price.

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Sara Rathner is a author at NerdWallet. E mail: srathner@nerdwallet.com. Twitter: @sarakrathner.

The article 7 Occasions You Would possibly Need to Product-Change a Credit score Card initially appeared on NerdWallet.